Saudi Arabia is next battleground for e-commerce titans

Shoppers take a stroll through Riyadh's Kingdom Centre Shopping Mall. The Kingdom is being targeted by global e-commerce corporations. (Getty Images)
Updated 18 May 2018

Saudi Arabia is next battleground for e-commerce titans

  • KSA online sales expected to surge to $13.9 billion by 2021
  • Overall GCC e-commerce to grow to $24 billion by end of decade

The battle for Saudi Arabia’s online shoppers is on.

One year on from the Amazon-Souq deal, the Kingdom's youthful population is being increasingly targeted by the region's burgeoning e-commerce industry.

With the largest economy in the GCC and the youngest Internet-connected population in the world, the Kingdom represents a golden goose for the world’s online retail players.

Online sales in Saudi Arabia are expected to surge to $13.9 billion by 2021 from about $8.7 billion in 2017, according to market researcher BMI.

The overall GCC e-commerce market is now tipped to grow to $24 billion by the end of the decade, say management consultancy A.T. Kearney.

UAE-born Souq.com, which was acquired by Amazon in 2017, has already built up a following and brand relationships in Saudi Arabia since its launch in 2005.
After months of delays, Noon.com also launched in the Saudi market in December last year, after starting up in the UAE earlier in the year.

Investors in Noon.com, including Emaar chairman Mohamed Alabbar and Saudi Arabia’s sovereign wealth fund, have put $1 billion into the project.

Saudi Arabia offers great scope for retail players looking to expand said Sam Blatteis, CEO of The MENA Catalysts and ex-Google head of Gulf government affairs.

As he puts it: “The Kingdom’s population has already expanded 50 percent since the start of the millennium, and has the highest YouTube and Twitter usage on earth. At this point, the pace of change has never been this fast, and yet it will never be this slow again.”

He said: “Tech titans from the world’s two largest economies – China and Silicon Valley – are signaling they plan to expand in Saudi Arabia. The Kingdom’s 2030 vision is only 12 years away and Saudi’s ‘Generation Y’ leadership is increasingly running the country. They are moving mountains to overhaul strategic industries from transportation to education legalizing ride-hailing apps to rolling out coding classes in schools nationally.”

As competition heats up in the marketplace and more players join the fray, trends will lean to specialization, said Monica Peart, senior forecasting director at E-Marketer.

“As more local e-commerce players arrive on the scene, you will start to see price competition and product competition. They will start to specialize, which will engender even more e-commerce activity,” added Peart.

But for e-commerce to really take off in Saudi Arabia and the wider GCC, shoppers “must be able to find better goods online than on the local shelves," said Peart.

She added: "For this scenario to become a reality, the region will need to ramp up its last-mile services, time-to-delivery, online ranges and its choice of payment gateways."

According to Walid Mansour, managing partner at Middle East Venture Partners (MEVP), which has investment in several e-commerce related ventures, including last-mile delivery company One Click, “e-commerce is growing at a very fast pace but faces challenges.”

Mansour highlights lack of data analytics as a key hindrance to the market. “What’s needed to boost the online commerce market is data, including predictive data, which leads to insights for actions, as well as automated marketing services,” he said. “But of course, there are a lot of (e-commerce) players in the market now, which means there is a lot of growth potential. The market is getting better … but it’s not there yet.”


UBS fined $51 million by Hong Kong regulator for overcharging clients

Updated 11 November 2019

UBS fined $51 million by Hong Kong regulator for overcharging clients

  • Hong Kong regulator’s investigation exposed ‘serious systemic internal control failures’ at the bank
  • In March, the Securities and Futures Commission banned UBS from leading initial public offerings in Hong Kong for a year

HONG KONG: Swiss bank UBS was fined HK$400 million ($51.09 million) by Hong Kong’s securities regulator for overcharging up to 5,000 clients for nearly a decade, the watchdog said on Monday.
The Hong Kong Securities and Futures Commission (SFC) said in a statement that an investigation found UBS had overcharged clients on ‘post-trade spread increases’ and charges in excess of standard disclosures and rates between 2008 and 2017.
THE SFC said the investigation exposed ‘serious systemic internal control failures’ at the bank. UBS had failed to disclose conflicts of interests and had overcharged some clients in ‘opaque’ trades, it said.
The overcharging affected 5000 Hong Kong managed client accounts in about 28,700 transactions, it said.
UBS has also agreed to repay the clients HK$200 million, the SFC said.
The regulator said the over-charging occurred in the bank’s wealth management division on bond and structured notes transactions.
UBS was found to have increased the spread charged after the execution of a trade without the clients’ knowledge, it said.
In the statement, the SFC said UBS was also found to have falsified some account statements which were issued to financial intermediaries who were authorized to trade for the clients to “conceal the overcharges.”
UBS said the issues were ‘self-reported’ to the SFC and the results found were against the bank’s standard practice.
“The relevant conduct predominantly relates to limit orders of certain debt securities and structured note transactions, which account for a very small percentage of the bank’s order processing system,” the bank said in a statement.
SFC chief executive Ashley Alder said while each “overcharge represented a fraction of each trade” the bank’s “misconduct involved decisions and a pervasive abuse of trust resulting in significant additional revenue for UBS to which it was not entitled.”
In March, the SFC banned UBS from leading initial public offerings in Hong Kong for a year after it found the bank, and some of its rivals, had failed to carry out sufficient due diligence on a number of deals.
UBS was fined HK$375 million while Morgan Stanley was fined HK$224 million, Merrill Lynch HK$128 million and Standard Chartered (StanChart) HK$59.7 million, all for failures when sponsoring, or leading, public market floats.